Blockchain Weaknesses: When not to use Blockchain

Blockchain Weaknesses: When not to use Blockchain

Blockchain Weaknesses: When to not to Use Blockchain

The emergence of blockchain technology in recent years has created a plethora of use cases. These can range from supply chain to finance. There is no denying that it is a powerful tool. However, this does not mean blockchain weaknesses do not exist. If you are contemplating using some form of blockchain technology, then you need to confirm if this is the right tool for the job. Below is a list of Blockchain weaknesses which should help you evaluate if you should be using the blockchain

  • The process stores a lot of data, or the data size is large
  • The process involves confidential data (Financial / Medical / Business etc)
  • The transaction rules can change frequently

Next, we will discuss in more detail the conditions that are not well suited to blockchain-based solutions.

The process stores a lot of data, or the data size is large

With blockchain technology, the entire database(ledger) is stored across the different nodes. As the replication factor of these systems is high, they are best suited to databases that have many state changes or store only the minimum necessary amount of information. If data is fairly static, or if the files to be stored are quite large, a different solution may be more appropriate such as traditional databases.

The Process Involves Confidential Data

A very well known advantage of blockchains is the revolutionary transparency they provide. However, in many situations, this can also be considered a blockchain weakness. Currently, ways to hide confidential data on the blockchain are still being developed while sharing it only to relevant parties (An example of this is the private Blockchain Hyperledger.) Regulations for data privacy, such as GDPR, often do not allow for blockchain solutions.

Once data is on a Blockchain it is immutable which could break the right to be forgotten policies of certain countries.  This requires a business to conduct a review of the relevant privacy rules governing their business case. Example questions that should be asked are: is leaking data in the encrypted form allowed? What level of encryption should be considered when transmitting data?

The transaction rules are changed frequently

Businesses processes are complicated. Therefore if rules around your business processes change frequently, or change unexpectedly, then blockchain may not be the best solution. The rules of transactions in blockchain are often pre-determined, and smart contracts cannot be changed once they have been initiated. Everything that takes place on a blockchain must be completely deterministic. Additionally, blockchains are append-only databases. With these blockchain weaknesses, a traditional (relational) database may be more suitable. You will then be able to make changes to your data as the rules of your transactions change.

What are the simpler alternatives?

For some applications, other options are simply more efficient. When you are evaluating blockchain technology, you need to consider the above blockchain weaknesses. Whether cloud file storage, a centralised database, or database replication with master & slave relationship between the original/copies is suitable. If you find those structures are suitable, then you will be able to deploy your application with reduced complexities.

The below diagram provides a generalised, high-level decision tree about when to use or not to use blockchain technology

Blockchain weaknesses decision path

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